In the three decades before the 2008 financial crisis, individual national economies became increasingly global: banks, companies and consumers overseas had a direct impact on the economy here in the United States.
But in recent years, the amount of money flowing across borders has drastically decreased. According to a new report, this represents a drastic shift away from international commerce, with localized markets more dependent on domestic consumption for growth. It could mark the end of modern globalization.
Category Archives: Trade
Once the world admitted China to the World Trade Organization in 2001, we welcomed the country into our free-markets. We trusted the global economy would evolve toward free and fair trade. We then set our policies on cruise control, assuming the world would follow the U.S. model.
Instead, China got a hand on the steering wheel: It turned the rules of global business in its favor. We woke up to find a hijacking of our free-market system. China was manipulating its currency, subsidizing its firms, undermining nascent U.S. firms, erecting trade barriers, and stealing intellectual property. China was using its firms as instruments of state capitalism—it even coordinated them to monopolize critical resources such as steel and rare earths.
What was that you were saying about globalization being inexorable?
A quick look at a series of under-appreciated recent stories – a Sino-Japanese territorial spat’s real economic consequences and a drop in both global trade and cross-border lending – shows a world becoming less tightly integrated and a lot more economically unpredictable.
The idea that the world will continue to become more economically integrated, with an ever more complex global supply chain and increasingly international corporations and banks, lies at the heart of most mainstream economic thinking.
As Our Economy is Outsourced to China the Obama Administration Once Again Does Nothing | The Economic Populist
Once again the U.S. Treasury and President Obama have refused to label China a currency manipulator, this time by delaying their report on exchange rates until after the election. The excuses abound, with the claim the Treasury Department must assess progress via a G-20 meeting, scheduled conveniently in November, to oh gee, the administration doesn’t want to start a trade war. Anyone bothering to view the statistics on trade knows the United States has been in a trade war with China for over 12 years and guess what, we lost.
When China applied to join the World Trade Organization in 2001, the argument in favor of its admission went something like this: China has more and higher tariffs than we do. So its admission will result in greater relative liberalization of the Chinese market and will reduce the U.S. trade deficit by providing more opportunities for sales in China than for sales in the already relatively open U.S. market.
On top of that, a popular mantra that held sway in the media and in academia argued that while corporations may compete economically countries don’t and if they try to do so they will only hurt themselves. It continued by saying that free trade will make all countries rich and that being rich they will all become democratic and being democratic they will no longer go to war because we “know” that democracies don’t go to war with each other.
Now let’s look at how things have developed over the past twelve years and at some recent headlines and editorial comments.
The administration alleges Beijing provided $1bn (£610m) of subsidies between
2009 and 2011 by increasing tariffs on US exports of car-parts, according to
a complaint filed at the World Trade Organisation (WTO).
Within hours China had hit back, using its own complaint to the WTO to
challenge plans in Washington to increase tariffs on subsidised imports from
“We are continuing to make it clear to our trading partners that we will fight
to support each jobs here at home,” Ron Kirk, America’s top trade official.
said on Monday .
Nobody wins in a two-sided trade war. However, somebody does win in a one-sided trade war like the current system.
Is it ever a good idea to trade with hostile nations who have nuclear weapons pointed at you? What about nations who steal your nuclear weapons designs?
In the early 1990s Deng Xiaoping introduced the 24 Characters strategy: keep cool-headed to observe, be composed to make reactions, stand firmly, hide our capabilities and bide our time, never try to take the lead, and be able to accomplish something.
Why does China need to hide its capabilities? And what is it bidding its time for?
The answer is of course that once China gets strong enough there will be payback for historical grievances from the West and Japan. Does that sound like a good trading partner?
China has moved to bolster its legal position in a volatile territorial dispute with Japan, state newspapers said on Monday, warning that Japan could endure another “lost decade” of economic stagnation if Beijing turns to trade retaliation.
The volley of warnings from Chinese officials and newspapers came after a weekend of protests across dozens of cities, some of them violent. Japanese Prime Minister Yoshihiko Noda urged Beijing to ensure Japan’s people and property were protected.
“But in struggles concerning territorial sovereignty, if Japan continues its provocations, then China will take up the battle,” the paper said.
China warned Japan on Thursday that trade could be hurt by the flare-up in tension over a group of disputed islands that is fraying ties between Asia’s two biggest economies.
The latest warnings from China brought a call for restraint from Japan, which on Tuesday announced it had bought the disputed islands in the East China Sea from a private Japanese owner, an act Beijing called a violation of its sovereignty.
“With Japan’s so-called purchase of the islands, it will be hard to avoid negative consequences for Sino-Japanese economic and trade ties,” Chinese Vice Minister of Commerce Jiang Zengwei told a news briefing.
“This combination of mounting economic tensions and leadership transitions heightens the risks of a destabilizing shift in the relationship that has a nontrivial chance of sparking a trade war,” says Roach. “In any war, there is always the saga of the itchy trigger and the first shot.
“With America still licking its wounds several years after the Great Crisis, there is no shortage of itchy fingers in Washington.”
Roach says the following scenario is all too likely: Following his January 2013 presidential inauguration, Mitt Romney issues an executive order declaring China guilty of manipulating its currency.